Day One
Foundations of Distressed Debt
Definition: What is distressed debt?
Market Background: Size, key participants, historical returns, and composition (corporate, financial institutions, sovereign)
Causes of Corporate Financial Distress: Early warning signals and implications for resolution
Distressed Debt Outcomes: Remaining performing, liquidation, or restructuring
Evaluating Distressed Debt Performance
Business Assessment: Products, competition, customers, and company performance
Financial Assessment: Financial statement analysis, forward-looking financial modeling, key credit metrics, covenant compliance, liquidity analysis, and debt servicing ability
Instrument Assessment: Covenant, seniority, security, and guarantor protections
Exploring asset sales, secured financing, sale-leaseback transactions, and equity raising
Case Study: New World Resources Plc (Central European coal and coke producer)
Workshop: Evaluate whether Norske Skogindustrier ASA’s (Norwegian newsprint and magazine paper producer) senior unsecured bonds will remain performing.
Distressed Debt Restructuring
Approaches to Restructuring:
Out-of-court restructuring: Voluntary vs. coercive exchanges, holdout problems
In-court restructuring: Pre-packaged or pre-negotiated versus post-petition processes
Bankruptcy Law Fundamentals: UK, Europe, US
Estimating Sustainable Debt Levels: Designing restructuring around business valuation
Valuation Techniques: EBITDA multiple and DCF m
Capital Structure and Group Structure: Recovery value and the complexities of multi-jurisdictional operations
Case Study: Wind Hellas (Greek mobile operator)
Workshop: How might Codere SA (international gaming company) be restructured? Are its senior unsecured bonds a good investment opportunity?
Day Two
Distressed Debt Investing
Investment Approach: Scenario-probabilistic framework for distressed debt investing
Desired Characteristics of Distressed Debt Investments
Active Control vs. Passive Non-Control Investors
Stakeholder Objectives & Conflicts: Identifying fulcrum capital and understanding stakeholder tactics
Due Diligence: Business, financial, instrument, and legal assessments
Case Study: Countrywide (UK estate agent)
Case Study: Truvo (European directories business)
Workshop: Are SolarWorld AG’s (solar power products company) bonds an attractive investment?
Special Topics in Distressed Debt Investing
Financial Institutions: How are failed banks and insurance companies restructured and resolved? Impact of new special resolution regimes, bail-ins, and contingent convertibles
Case Study: Anglo Irish Bank (Irish commercial real estate lender)
Case Study: Groupama SA (French insurance company)
Sovereign Distressed Debt: Addressing sovereign liquidity and solvency issues; assessing debt sustainability and political influences
Case Study: Greece Private Sector Involvement (PSI)
Workshop: Assess investment opportunities within Banca Monte Dei Paschi di Siena Spa’s (Italian retail bank) capital structure.
.png)
